Cancer development in humans and animals is a multistep process involving multiple genes. We have shown that the neoplastic transformation of Syrian hamster embryo cells (SHE) in culture is a multistep process involving both activation of proto-oncogenes and inactivation of a tumor suppressor gene. Normal, early passage SHE cells were not neoplastically transformed by either the v-Ha-ras or v-myc oncogenes alone; however, transfection of SHE cells by the two oncogenes in combination resulted in tumorigenic conversion. In order to determine whether additional changes occurred in the ras plus myc induced tumors, cytogenetic analyses of the tumors were performed. A nonrandom chromosome loss (monosomy of chromosome 15) was observed in the ras/myc tumors. The biological role of this chromosome loss was studied in hybrids between ras/myc tumor cells and normal SHE cells. Tumorigenicity of the ras/myc tumor cells was suppressed following hybridization with normal cells; re- expression of tumorigenicity at later passages correlated with the loss of chromosome 15 suggesting that this chromosome plays a role in suppressing tumorigenicity. The hybrid cells which were suppressed for tumorigenicity still expressed the ras and myc oncogenes. An early change in carcinogen-induced neoplastic progression of SHE cells was induction of immortality. Carcinogen-induced immortal cells at early passages still retained the ability to suppress tumorigenicity in cell hybrids. This ability decreased with passaging of immortal cell lines and subclones are heterogenous in their ability to suppress tumorigenicity. The susceptibility of immortal cell lines to neoplastic transformation by DNA transfection with v-Ha-ras oncogene or tumor DNA inversely correlated with the tumor suppressive ability of the cells in cell hybrids. Taken together these observations indicate that neoplastic transformation of Syrian hamster embryo cells involves at least three steps: (1) induction of immortality; (2) activation of transforming gene or oncogene and (3) loss of or inactivation of a tumor suppressor gene.